Intel’s deal dilemma
First came news that Qualcomm had made an informal takeover approach for Intel, its historically bigger rival. Now comes one that Apollo Global Management has offered to invest billions in the embattled chip giant.
It’s unclear whether Intel would proceed with either potential deal. But their existence underscores how far the onetime giant of American chipmaking has fallen.
A sale to Qualcomm would present huge hurdles:
Qualcomm is best known for chips used in cellular technology and it doesn’t make its own processors. That raises a question about whether it would want to buy Intel’s foundry business, which makes semiconductors for outside clients. (Uncertainty over the foundry unit would be troubling for the Biden administration, whose domestic chip revival plans hinge in part on the Intel division’s success.)
Buying Intel, whose market value on Friday was $93 billion, could be challenging to finance.
Antitrust scrutiny is perhaps the biggest obstacle. Some experts contend that Intel and Qualcomm have limited overlap. But uniting two of America’s biggest chipmakers could be a nonstarter for regulators.
One thing Qualcomm won’t do, according to The Financial Times, is make a hostile bid. Pursuing one would introduce more issues … as Broadcom discovered when it went hostile on Qualcomm years ago.
Apollo is seeking to make a big investment in Intel, according to Bloomberg, which the firm has reportedly pitched as a vote of confidence in the company’s turnaround plan. The deal could be similar to the investment that Apollo helped lead into the hard-drive maker Western Digital last year.
Apollo knows Intel well: In June, it bought a stake in the company’s chip manufacturing operation in Ireland.
The investment interest raises other questions. What would happen in a takeover to the billions in subsidies that Intel has been promised via the CHIPS and Science Act? And how far would the Biden administration go to protect a company it seems to view as a key component of manufacturing national security?
That said, Intel has its eye on its own potential transactions, as DealBook has previously reported. The company has already said it would give the foundry unit its own board, making it easier to raise capital for that business, and perhaps sell it later.
Intel will also consider selling some of its stake in Altera, a chipmaker it bought in 2015.
The heightened attention puts more pressure on Intel. The company reassured Wall Street last week when it announced a series of initiatives, including signing big contracts with Amazon and the Pentagon. But bigger problems remain, including catching up to Nvidia on chips for artificial intelligence.
HERE’S WHAT’S HAPPENING
Israel launches new airstrikes targeting Hezbollah in Lebanon. The Israeli military told civilians to evacuate villages in southern Lebanon where it said Hezbollah was storing weapons, after the two sides traded deadly strikes during the weekend. The fighting has spurred concerns about wider instability in the Middle East.
Congressional leaders hope to pass a short-term government spending bill. The legislation would extend federal appropriations until Dec. 20, pushing the threat of a government shutdown past the November elections — but firmly into the lame-duck period for the White House and Congress. One thing the proposal doesn’t include is Republicans’ previous demand, backed by Donald Trump, for new proof-of-citizenship requirements for voter registration.
New economic data could test the Fed’s rates decision. Second-quarter G.D.P. figures (Thursday) and the Personal Consumption Expenditures index report (Friday), the central bank’s preferred inflation gauge are set to be released this week. Also on deck: Google begins its defense on Monday in the antitrust trial over its ad dominance and Novo Nordisk’s C.E.O. is set to testify in the Senate on Tuesday about the prices of its weight-loss drugs.
The economy takes center stage
Voters are expected to get more detail this week on Vice President Kamala Harris’s economic plans.
She will deliver a policy speech on Wednesday and has revealed little about what she will say, other than that she’ll focus on helping households boost their finances and aiding companies with a new round of incentives. The new details will be watched closely by undecided voters and donors for clues to how she plans to manage the economy if she wins in November.
Harris is seen as preserving many of the Biden administration’s core economic policies, which focus on infrastructure, climate and a tough-on-China approach to global trade. On the campaign trail, she has vowed to crack down on price gouging, abolish taxes on tips and ease the housing crunch — issues that poll well in battleground states.
But she has tried to differentiate herself on tax policy, pledging to pull back from one of Biden’s proposals to tax the investment earnings of wealthy Americans.
Donald Trump says he would slash taxes. He has hammered Harris and Biden for inflation and the cost of living, and sees tax breaks as a way to win over voters. But some Americans have started to feel better about their finances, which could improve now that the Fed has started to lower interest rates.
Voters want more detail on Harris’s policies. Polls show the race to be a tossup, and that the economy could be a decisive factor. Many Americans tend to give Trump higher marks on that crucial issue, but she has begun to gain ground.
That hasn’t slowed the Harris money machine. The vice president raised vastly more than Trump last month, and she pulled in $27 million at a luncheon at Cipriani Wall Street on Sunday. That came after the Harris campaign stressed the benefits of wealth creation to big business in meetings between some of her chief aides and financial executives last week, DealBook reported.
Meanwhile, critics say Trump’s policies could upend America’s tax system. He’s gone further than Harris in calling for the repeal of taxes on tips, overtime earnings and Social Security benefits while pushing a broad tariff plan.
“Whether he knows it or not, or intends it or not, it’s a shift from taxing income to taxing consumption in some fashion,” Michael Graetz, a tax scholar at Columbia Law School, told The Times.
Climate action
President Biden’s Inflation Reduction Act faces an uncertain future. The I.R.A. is popular with businesses and reviled by Donald Trump, who has vowed to gut the climate law if he’s re-elected and rescind billions in unspent funds.
But the former president could find it hard to reverse the growing progress on climate initiatives if he wins in November, Vivienne Walt reports for DealBook.
Businesses are expected to invest $100 billion in green projects this year. And a new report from Net Zero Tracker on Monday shows a sharp uptick in companies and governments worldwide adopting emissions targets.
Here is the latest data from the group, which includes public policy experts in the U.S. and Europe who audit climate commitments by businesses and governments.
The number of companies with net-zero targets has increased to 1,145 from 929 last year. That’s more than half of the big companies they track.
In the same period, 271 cities adopted the targets, up from 252.
Nineteen states have set net-zero targets.
“The landscape has changed in a lot of ways,” Thomas Hale, a public policy professor at Oxford’s Blavatnik School of Government, and co-lead of Net Zero Tracker, told DealBook. “In 2016, there was no U.S. state with a net-zero target.”
“Net zero” targets on carbon emissions underpin the 2015 Paris Agreement. Trump withdrew the U.S. from the accord in 2017 — unleashing a backlash, as U.S. mayors and governors raced to declare net-zero targets. Biden reinstated the U.S., but Trump has said he would pull the U.S. back out if he wins.
Many companies are hesitant. Holdouts include Tesla and Berkshire Hathaway, where Warren Buffett has rebuffed shareholder pressure to join the climate fight. “A lot of companies are waiting to see what happens in November before taking decisive steps,” Hale said.
Many corporate plans still lack credibility, Net Zero says. The group said that only a few companies, including Alphabet, earned its highest marks for robust and detailed emissions plans. That’s as regulators vow to crack down on companies for “greenwashing,” or making bogus climate pledges.
“Our findings show barely any improvements,” Steve Smith, executive director of Oxford Net Zero, a climate research unit, said of the greenwashing problem.
Conference-palooza
Manhattan is bracing for a week of terrible traffic with the United Nations General Assembly set to converge with a number of high-profile conferences that will bring star power — and a nightmare for commuters — to New York City.
Officials have already issued gridlock alert days for the entire week. That’s sure to reignite questions about Gov. Kathy Hochul’s decision to cancel congestion pricing in June, a plan that supporters said would have reduced traffic jams and boosted public transport. The likelihood that there will be protests against the war in the Middle East will only add to clogged streets in the city.
If you’re willing to brave the expected travel challenges, here’s your guide to a busy week:
The United Nations General Assembly is the big ticket. More than 130 world leaders are expected to speak, with President Biden addressing the meeting on Tuesday. Other speakers include President Emmanuel Macron of France, Prime Minister Keir Starmer of Britain and Prime Minister Narendra Modi of India.
The Clinton Global Initiative. The event is expected to feature Matt Damon, Jill Biden, Prince Harry, Bill Gates and more for a two-day meeting at the New York Hilton Midtown.
The Earthshot Prize Innovation Summit. The event, hosted by The Earthshot Prize, founded by Prince William, and Bloomberg Philanthropies, is in its third year and will take place at venues across the city. It’s expected to include Jane Fonda, the actress and campaigner; Mark Carney, the U.N. special envoy on climate action and finance; and Christiana Figueres, chair of the Earthshot Prize and the former top U.N. climate change official.
The Times’s Climate Forward event. The annual one-day conference hosted by David Gelles, a Times reporter who leads the Climate Forward newsletter, alongside colleagues, is back on Wednesday. Guests include Al Roker; Ryan Gellert, the C.E.O. of Patagonia; and Vicki Hollub, the president and C.E.O. of Occidental. Sign up here to watch a livestream of the event.
THE SPEED READ
Deals
The American billionaire Dan Friedkin, who owns the Italian soccer club A.S. Roma, is reportedly near a deal to buy Everton F.C., the English Premier League franchise. (Bloomberg)
UniCredit has raised its stake in Commerzbank to 21 percent and has applied for more, despite the German government’s opposition to a takeover of the lender. (Reuters)
Elections, politics and policy
How the Fed’s decision to keep rates high for two-and-a-half years led to a huge windfall for banks — but not for savers. (FT)
India said it wouldn’t join the Regional Comprehensive Economic Partnership, the world’s biggest trade agreement, adding that it wouldn’t be in its interest to join a free-trade pact with China. (CNBC)
Best of the rest
Read the 10,367-word opus by the venture capitalist Vinod Khosla on artificial intelligence’s potential benefits and drawbacks for society. (Khosla Ventures)
What has Jony Ive, the former Apple design guru, been up to since leaving the iPhone maker? (NYT)
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